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This start-up CEO says she was harassed — and she's calling on VCs to fix the problem in tech

CNBC logo CNBC 17/7/2017 Anita Balakrishnan

Stories of sexual harassment have flooded Silicon Valley from women in Uber and other start-ups.

Jennifer Hyman, CEO of Rent the Runway, said she too was mistreated and that it's time for venture capitalists to radically change the way they do business.

"When [venture capitalists] invest in founders, especially prior to a Series B, you're investing not just in a company, you're investing in a person, right?" said Hyman, who runs a start-up that offers short-term rentals and subscriptions of upscale clothing and accessories. "If your investment is being harassed, distracted, halted in some way, it's not just in your moral responsibility to help her — it's also ... your financial responsibility to help her."

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'I was sexually harassed while building Rent the Runway'

"I was sexually harassed while building Rent the Runway — propositioned, sent sexual text messages, harassed and threatened in person," said Hyman, who did not share the name of the alleged harasser or the timeline of events.

Speaking to CNBC's "Squawk Alley" on Monday, Hyman said that she was initially going to keep quiet about the incidents until the alleged harasser complained about her to the Rent the Runway board. That person, who she says is no longer a technology investor, was ultimately "eliminated" from Rent the Runway. Hyman said she has raised $190 million from multiple investors.

"I think we didn't go far enough," Hyman said. "While we eliminated this investor from working with us, we were privileged to do that. We had access to capital, we had really strong investors. In many cases, women are being harassed by people who are on their board, or who are associated with one of their venture capitalists."

'I'm the exception to the rule.'

While some prominent male venture capitalists have vocally condemned sexual harassment, Hyman said the game will really change when more women become investors. Women may have been shut out of flashy start-ups in the past, but there are many women working their way up the ladder now who would be great candidates for venture capital, Hyman said.

Another issue, Hyman said, is non-disclosure agreements and non-disparagement agreements. Hyman pointed to Katrina Lake, founder of fellow retail start-up Stitch Fix, who was reportedly asked to sign a non-disparagement agreement after she complained about advances from an investor at Lightspeed Venture Partners.

Stitch Fix, Lightspeed, and a Rent the Runway board member were not immediately available to comment on the report. Lightspeed Venture Partners has said in the past it should have done more to address sexual harassment allegations.

"If the most successful female entrepreneur in this country is subject to this behavior from one of the top firms ... then this is going to happen to everyone," Hyman said.

It's incumbent on the venture capitalists involved to take action now, Hyman said, "to show not only that they are apologizing to Katrina, but that it's a full mea culpa, that the entire NDA is removed, and we can move forward as an industry." Preventing these kinds of distractions for female founders is just good business, Hyman added.

"There are a lot of subtle things that are harder to stamp out of a culture, in terms of male entrepreneurs being mentored more than female entrepreneurs ... male entrepreneurs getting several strikes against them before they're kind of let go, whereas female entrepreneurs it's kind of one strike and you're out," Hyman said.

Hyman said she's the "exception to the rule" in that she had the support of her board. But even as a high-profile CEO, she said, she wouldn't have necessarily known until a few years ago about the network of other entrepreneurs and members of the media that can help address these issues.

"When this does happen — and it's not going to stop happening overnight — when this happens, what's the protocol?" Hyman said. "Who should women be contacting, especially if her own board is not a resource for her at that point?"

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